Class-Action Suit Alleges Bank Defrauded Investors

Goldman Sachs Group Inc. must face a class-action lawsuit that alleged it defrauded investors who bought more than $2 billion in collateralized-debt obligations linked to subprime mortgages, a federal judge ruled.

Hedge fund Dodona I LLC, which is leading the group of investors, claims that Goldman Sachs in late 2006 and early 2007 created two CDOs called Hudson, which were backed by residential mortgage-backed securities, even as...